Comments on: The perils of offshoring – for Indian finance workers? http://clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/ Thu, 20 Nov 2008 21:27:17 +0000 http://wordpress.org/?v=2.6.3 By: Paul Frijters http://clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113678 Paul Frijters Fri, 06 Apr 2007 04:08:36 +0000 http://www.clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113678 complaining against off-shoring smacks of Ludism: a rearguard action against an almost inevitable development. Preventing off-shoring of simple administrative jobs that only need a modicum of sense and good English would need more than just tarriff walls because what's off-shored are services that come in via phone and the internet. It would thus need electronic isolation too. Cant be done. The off-shoring that might make things interesting is health services. Health is a growth industry where many services consist of fairly predictable standardised procedures. It is furthermore the type of service that small regions abroad could specialise in implying that particular cities aborad could choose to engage in particular health services. Its only happening very low-scale now, but there's no reason why in the future we couldn't outsource hip replacements, heart operations, etc. These services could even be offered by travelling large medi-ships. This would circumvent the strong market distortions present in this country and elsewhere. That would really lead to political tension. complaining against off-shoring smacks of Ludism: a rearguard action against an almost inevitable development. Preventing off-shoring of simple administrative jobs that only need a modicum of sense and good English would need more than just tarriff walls because what’s off-shored are services that come in via phone and the internet. It would thus need electronic isolation too. Cant be done.
The off-shoring that might make things interesting is health services. Health is a growth industry where many services consist of fairly predictable standardised procedures. It is furthermore the type of service that small regions abroad could specialise in implying that particular cities aborad could choose to engage in particular health services. Its only happening very low-scale now, but there’s no reason why in the future we couldn’t outsource hip replacements, heart operations, etc. These services could even be offered by travelling large medi-ships. This would circumvent the strong market distortions present in this country and elsewhere. That would really lead to political tension.

]]> By: Jobs being offshored « Sachi’s hyperbolic space http://clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113673 Jobs being offshored « Sachi’s hyperbolic space Fri, 06 Apr 2007 03:23:30 +0000 http://www.clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113673 [...] being offshored Nicholas Gruen wrote this post at Club Troppo on a story in the Australian about an agreement between the Australian Finance [...] [...] being offshored Nicholas Gruen wrote this post at Club Troppo on a story in the Australian about an agreement between the Australian Finance [...]

]]> By: Sacha http://clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113669 Sacha Fri, 06 Apr 2007 03:00:43 +0000 http://www.clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113669 I wouldn't be surprised if responses to jobs being offshored is one of the small themes of this year's federal election, especially given its sometimes appearance on the front pages of newspapers such as the Daily Telegraph. I wouldn’t be surprised if responses to jobs being offshored is one of the small themes of this year’s federal election, especially given its sometimes appearance on the front pages of newspapers such as the Daily Telegraph.

]]> By: Sacha http://clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113666 Sacha Fri, 06 Apr 2007 02:57:11 +0000 http://www.clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113666 Something I don't understand about all the Daily Telegraph and SMH-type media reports of jobs being offshored is that they seem to only consist of moaning and groaning on the behalf of the people whose jobs are disappearing (which is understandable - I'd be annoyed if my job went overseas, which it might do!), soundbite grabs of trade union leaders warning about the dangers of sending work where its quality can't be guaranteed, and PR spin from the relevant companies. I don't think I've ever read in these media reports how people in high-wage countries could respond to jobs offshoring, apart from the "trade union solidarity" approach benefitting the less worse-off workers referred to in the story Nicholas referred to in his post. It's very unsatisfactory and it'd be nice to read about non-protectionist responses. Something I don’t understand about all the Daily Telegraph and SMH-type media reports of jobs being offshored is that they seem to only consist of moaning and groaning on the behalf of the people whose jobs are disappearing (which is understandable - I’d be annoyed if my job went overseas, which it might do!), soundbite grabs of trade union leaders warning about the dangers of sending work where its quality can’t be guaranteed, and PR spin from the relevant companies.

I don’t think I’ve ever read in these media reports how people in high-wage countries could respond to jobs offshoring, apart from the “trade union solidarity” approach benefitting the less worse-off workers referred to in the story Nicholas referred to in his post. It’s very unsatisfactory and it’d be nice to read about non-protectionist responses.

]]> By: Nicholas Gruen http://clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113595 Nicholas Gruen Thu, 05 Apr 2007 11:49:29 +0000 http://www.clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113595 Thx SJ, I've seen Brad's stuff on offshoring and it seems right to me. I'm not particularly hard line on this. If trade produces strong losses amongst the less well off, then there's nothing sacrosant about efficiency. But my problem is that 1. Protecting our poorer paid workers harms much worse paid workers and I know it's very unfashionable but I think their welfare needs are more urgent and 2. You need a story in which there is some great difficulty of migrating from trade exposed to non-trade exposed jobs and while I think there's somthing in that for manufacturing, I'm much less sure regarding the jobs that get offshored. Alan Blinder is concerned about offshoring and he's a smart and sensible person - so perhaps I'll need to read what he says more. Samuelson too - though some of his opponents made some pretty telling arguments against his model. So I'm yet to see why offshoring will be so bad for the Western workforce. Thx SJ,

I’ve seen Brad’s stuff on offshoring and it seems right to me. I’m not particularly hard line on this. If trade produces strong losses amongst the less well off, then there’s nothing sacrosant about efficiency. But my problem is that
1. Protecting our poorer paid workers harms much worse paid workers and I know it’s very unfashionable but I think their welfare needs are more urgent and
2. You need a story in which there is some great difficulty of migrating from trade exposed to non-trade exposed jobs and while I think there’s somthing in that for manufacturing, I’m much less sure regarding the jobs that get offshored.

Alan Blinder is concerned about offshoring and he’s a smart and sensible person - so perhaps I’ll need to read what he says more. Samuelson too - though some of his opponents made some pretty telling arguments against his model. So I’m yet to see why offshoring will be so bad for the Western workforce.

]]> By: SJ http://clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113591 SJ Thu, 05 Apr 2007 09:39:14 +0000 http://www.clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113591 Hmm. Nicholas, I'm having second thoughts. From Brad DeLong: <a href="http://delong.typepad.com/sdj/2005/12/how_fast_can_in.html" rel="nofollow">How Fast Can India Grow?</a> Hmm. Nicholas, I’m having second thoughts.

From Brad DeLong: How Fast Can India Grow?

]]> By: SJ http://clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113587 SJ Thu, 05 Apr 2007 09:19:04 +0000 http://www.clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113587 Nicholas, my interpretation of this sentence: "<i>Mr Schroder said the agreement carried force because India's bank employees, unlike its call centre and IT workers, were one of the most unionised in the world, with 90 per cent of the workforce signed up.</i>" is that the unionised Indian workers are opposed to the call centres because they recognise the potential for their own jobs to be outsourced within India at lower pay rates. For your interpretation to hold, you'd need to present evidence that there was already close to full employment for Indians qualified to work in call centres. Nicholas, my interpretation of this sentence:

“Mr Schroder said the agreement carried force because India’s bank employees, unlike its call centre and IT workers, were one of the most unionised in the world, with 90 per cent of the workforce signed up.”

is that the unionised Indian workers are opposed to the call centres because they recognise the potential for their own jobs to be outsourced within India at lower pay rates.

For your interpretation to hold, you’d need to present evidence that there was already close to full employment for Indians qualified to work in call centres.

]]> By: Paul Frijters http://clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113570 Paul Frijters Thu, 05 Apr 2007 04:45:30 +0000 http://www.clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113570 the puzzle for an economist is that you value symbols at all. Economists refer to unimplementable agreements as cheap talk, of no value at all. I'd be hard put to find you an applied economic model where symbols come out as being valued. Perhaps in the self-esteem literature? the puzzle for an economist is that you value symbols at all. Economists refer to unimplementable agreements as cheap talk, of no value at all. I’d be hard put to find you an applied economic model where symbols come out as being valued. Perhaps in the self-esteem literature?

]]> By: Patrick http://clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113567 Patrick Thu, 05 Apr 2007 04:07:30 +0000 http://www.clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113567 What's irrational about liking low-cost symbols? What’s irrational about liking low-cost symbols?

]]> By: Paul Frijters http://clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113566 Paul Frijters Thu, 05 Apr 2007 03:39:15 +0000 http://www.clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113566 from my limited knowledge of this aspect of labour economics, I'd say such agreements are almost entirely symbolic. They make some people feel good but there is no credible mechanism to enforce them. Like the Kyoto targets. The amazing thing from a rational economic perspective is the popularity of such symbols. from my limited knowledge of this aspect of labour economics, I’d say such agreements are almost entirely symbolic. They make some people feel good but there is no credible mechanism to enforce them. Like the Kyoto targets. The amazing thing from a rational economic perspective is the popularity of such symbols.

]]> By: Bring Back CL's blog http://clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113559 Bring Back CL's blog Thu, 05 Apr 2007 02:46:33 +0000 http://www.clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113559 so speaks a man who has never tried to get through an airport in India. It is notoriously corrupt but getting better. so speaks a man who has never tried to get through an airport in India.

It is notoriously corrupt but getting better.

]]> By: Sacha http://clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113558 Sacha Thu, 05 Apr 2007 02:38:18 +0000 http://www.clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113558 <blockquote>“Nobody supports there being offshoring at the expense of domestic workers.”</blockquote> Except potentially those workers who would benefit!

“Nobody supports there being offshoring at the expense of domestic workers.”

Except potentially those workers who would benefit!

]]> By: Patrick http://clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113552 Patrick Thu, 05 Apr 2007 01:18:31 +0000 http://www.clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113552 If you believe union propaganda it will. Because they are completely trustworthy, of course. Frankly, I have just as much trust in Indians as I do in Australians. Especially because in India the relative social status of the work is doubtlessly higher, which to mind suggests that they are less likely to be corrupt. Although if they are so highly unionised ....(couldn't resist). If you believe union propaganda it will. Because they are completely trustworthy, of course.

Frankly, I have just as much trust in Indians as I do in Australians. Especially because in India the relative social status of the work is doubtlessly higher, which to mind suggests that they are less likely to be corrupt. Although if they are so highly unionised ….(couldn’t resist).

]]> By: Bring Back CL's blog http://clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113547 Bring Back CL's blog Wed, 04 Apr 2007 23:48:27 +0000 http://www.clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113547 the large problem of outsourcing to India for banks is that information will get to some people that shouldn't given the corruption involved. the large problem of outsourcing to India for banks is that information will get to some people that shouldn’t given the corruption involved.

]]> By: Nicholas Gruen http://clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113509 Nicholas Gruen Wed, 04 Apr 2007 13:36:09 +0000 http://www.clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113509 Well on my assumption - that finance workers are paid less in India than in Australia for similar levels of skill - the frustration of offshoring from Australia will lower the demand for finance workers in India (or if you like prevent it being increased). Do you really think that if you're uninonised you don't benefit from increased demand for your labour? That's what I take you to be implying. Well on my assumption - that finance workers are paid less in India than in Australia for similar levels of skill - the frustration of offshoring from Australia will lower the demand for finance workers in India (or if you like prevent it being increased). Do you really think that if you’re uninonised you don’t benefit from increased demand for your labour? That’s what I take you to be implying.

]]> By: SJ http://clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113506 SJ Wed, 04 Apr 2007 13:11:35 +0000 http://www.clubtroppo.com.au/2007/04/04/the-perils-of-offshoring-%e2%80%93-for-indian-finance-workers/#comment-113506 Nicholas Gruen Says: "<i>...it will reduce the remuneration of the Indian finance workers...</i>" This generalisation doesn't work. It would be more correct to say that it might reduce the prospective income of future un-unionised Indian finance workers. Nicholas Gruen Says: “…it will reduce the remuneration of the Indian finance workers…”

This generalisation doesn’t work.

It would be more correct to say that it might reduce the prospective income of future un-unionised Indian finance workers.

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